AT&T Inc. To Compete With Netflix, Inc.?

While many believe that cable TV will soon be a thing of the past, AT&T Inc. (NYSE:T) wants in on the action. The company promised $500 million in funding along with the Chernin Group to create an over the top (OTT) television service.

While the field is crowded to say the least with companies like Netflix, Inc. (NASDAQ:NFLX) and Hulu in the lead, this will mark the first time that a big U.S. ISP has decided to go over the top with a TV service. AT&T is the second-largest broadband Internet provider in the United States and the leading wireless provider. Chernin for its part is the majority stakeholder in Crunchyroll, a subscription based provider of on demand video content.

What do they have planned?

Today’s press release offers some understanding of what the two have planned but stopped short of elaborating on the content they will offer:

“‘A critical part of The Chernin Group’s strategy has been our significant focus on the online video industry, and joining forces with AT&T only further underscores our strategic commitment in this area as operators, investors and programmers,’ said Peter Chernin, Chairman and CEO, The Chernin Group. ‘Consumers are increasingly viewing video content on their phones, tablets, computers, game consoles and connected TVs on mobile and broadband networks. AT&T’s massive reach on those platforms across mobile and broadband and their commitment to the online video space make them the perfect fit for this venture with us.’”

The competition

The key is compelling content, and to this end the companies’ statement falls short in specifics. While Hulu, Netflix, Inc. (NASDAQ:NFLX) , and Amazon Prime are well positioned, it’s impossible to ignore the sheer size of AT&T when it comes to wireless and broadband access.

AT&T Inc. (NYSE:T) has over 110 million wireless subscribers, more than 16 million total broadband subscribers, is a leader in connected devices and continues to win awards for its wireless and wireline services.

AT&T Inc. (NYSE:T) is not alone with the announcement. Its competitor Verizon Communications Inc. (NYSE:VZ) clearly has similar plans and acquired Intel Media towards that end earlier this year. DISH Network Corp (NASDAQ:DISH) also struck a big deal with The Walt Disney Company (NYSE:DIS) last month that will allow it to offer streaming of Disney owned channels like ABC and ESPN.